WASHINGTON -- Rating agencies foresee little immediate impact on the credit of municipal waste-to-energy plants in the wake of the Supreme Court's ruling this week that ash residue is not exempt from costly hazardous waste regulation.
But the agencies remain cautious as they evaluate how well such facilities adapt to new requirements, analysts said.
The May 2 ruling in Chicago v. Environmental Defense Fund "is not going to have any immediate rating effect, but I think that there is some uncertainty as to how it will be implemented," said Marie Pisecki, vice president and supervisor of the solid waste group at Moody's Investors Service.
"The majority of states ... currently require testing" of waste to determine if it falls under hazardous waste provisions of the Resource Conservation and Recovery Act of 1976, Pisecki said.
"There are some technologies out there which would presumably enable facilities to pass the test if they are older facilities and ... wouldn't normally pass it. But because we don't yet have a lot of experience or history with" testing ash, "there could be some surprises there that we will be watching for," she said.
Henry Henderson, commissioner of environment in Chicago, said the city will be working with the Environmental Protection Agency's Region V over the next several weeks to develop "a testing protocol for the ash" that could be used as a model for a national toxicity test and for testing requirements in other states. The EPA's existing test for hazardous waste has not been applied to ash, and states may have additional varying requirements, Henderson said.
Analysts at Standard & Poor's Corp. said they have found that most managers of solid waste systems using waste-to-energy plants "believe that ash from their facilities will-... not require treatment as hazardous waste."
This is partly due to recycling and source separation programs that remove from the waste stream many items, such as batteries, that would otherwise produce higher levels of toxicity in waste-to-energy ash. "Also, many waste-to-energy plants employ state-of-the-art pollution control technologies that also reduce the level of toxicity" in the residue ash, according to a statement from Standard & Poor's analysts Malachy Fallon, Mark Ryan, and Howard Spumberg.
Standard & Poor's is evaluating solid waste ratings and contacting plant managers to discuss the ruling, the analysts said.
Janet Martin, senior vice president at Fitch Investors Service, said the agency's solid waste and resource recovery group also is evaluating ratings in light of the Supreme Court action. Ash disposal "is a significant cost in any resource recovery facility," Martin said. "I would agree that it is not something that is an immediate issue, but it is something that is evolving and needs to be evaluated on a case-by-case basis."